Sarkozy-EU at loggerheads over France’s debt

The fire-brand rightwing president of France, Nicholas Sarkozy has struck a note of discord with The European Union quite early in his term. Monday saw him clash with EU finance ministers over the economic direction that France is seeking to take vis-a-vis the European bloc’s overall vision. His stance at the meeting yesterday is an indication of the fact that Sarko is looking to put domestic priorities ahead of EU’s broader agenda. Even the fact that he attended yesterday’s meting in Brussels was a bit of an aberration since heads of sate rarely attend such meets. France’s ‘zero deficit goal’ may miss EU deadline Major differences have cropped up between the bloc and one of its major members France over the highly debatable economic reforms that Nicholas Sarkozy is avowed to implement. He indicated as much yesterday. In a rare grab of initiative by a eurozone leader, Sarkozy said that he cannot make any promises that France will abide by the pledge to balance the budget by 2010. He asserted: If we don’t get to 2010, I’ll be the first to regret that. If we don’t have the expected growth, we’ll have to say 2012. It’s just a question of being honest. He told EU Commission president, Jose Manuel Barroso that it was not possible for France to enact reforms in taxes and employment and at the same time meet EU’s deadline of reducing the country’s budget deficit to 1.8 per cent by 2008. Currently it hovers around the 2.4 per cent mark. Sarkozy is attempting to cut French taxes by more than 10 billion euros in an attempt to revive the economy and boost employment. It is obvious that any move in such direction will lead to the abandonment of the pledge that the previous administration signed barely three months ago. EU’s exasperation Sarko’s moves are a signal that France is ready to rise to the forefront in EU again. Its clout in the bloc was substantially reduced after French voters rejected the EU constitution almost two years back. Yes, the European leaders are wary of Nicholas Sarkozy’s eagerness to assert him on the big stage but, at the same time, they cannot ignore that he is trying hard to put his economy on track again. Nevertheless, some officials questioned his decision to invite himself to the meet yesterday and wondered whether he was going to run the entire show alone. Were his ministers mere ‘puppets’ they asked? Also EU cannot resort to sanctions against France because French deficit still runs at 2.5 per cent. Incidentally the benchmark rate at which the EU can resort to sanctions is set at 3 per cent. Further EU’s rule book provides that if a country resorts to structural adjustments in the economy, it is allowed to have deficits. IMF? Then there’s a small matter of tussle over the appointment of IMF head. Sarkozy has made his intentions clear that he wants a former French finance minister, Dominique Strauss-Kahn, as the next head of the International Monetary Fund. Sarko announced on Sunday that he wanted Kahn to take over Rodrigo Rato’s post, which will fall vacant in October. While no one questions Kahn’s credentials for the job, some are still viewing this as an attempt by the French to reassert themselves. Already French have the top posts in three premier world bodies and consequently several countries are in queue to block French’s attempts to control IMF as well It is still quite early days to comment upon the policies that France will adopt under its new prez. However, what is clear is Sarko’s disliking for established norms. If anything, yesterday’s events confirm that he’s determined to have his say in shaping up the affairs of the European countries. Image Source